- I would like to establish a business in Eastern Africa region. What options do I have?
- What are the tax laws in East Africa?
- What tax incentives are available to investors?
- What is the investment climate in East Africa?
- How can PKF assist in establishing a business in East Africa?
- What sectors are attractive?
I would like to establish a business in Eastern Africa. What options do I have?
The options available are as follows:
(I) Sole Proprietorship - Where a single individual owns and operates the business. The proprietor is personally responsible for all liabilities accruing to the business.
The registration formalities are fairly simple. The business name is required to be approved by Registrar of Companies after which application for registration is made. A certificate of registration issued within two weeks. The costs involved are minimal.
(II) Partnership is an association of individuals or other entities who own the business in the agreed ratios. The Partnerships are governed by the Partnership Act. It is advisable to have a partnership agreement. The partners are responsible for the actions of the partnership and those of the other partners in the ordinary course of business. Partners are taxed individually on the income of the partnership.
The registration process is similar to that for the sole proprietorship.
(III) Limited Liability Company is a distinct entity from its owners and is governed by Companies legislation in each East African country. Once the name is approved by Registrar of Companies, Memorandum & Articles of Association have to be drawn up, submitted for payment and stamp duty and filed with Registrar of Companies along with various other forms. This process takes approximately up to four weeks for registration.
(IV) Branch of a Foreign Company can be registered with the Registrar of Companies. This is a simple low cost formality and needs a maximum of two weeks for registration.
What are the tax laws in East Africa?
The tax laws in Kenya, Uganda and Tanzania are very similar.
Individuals are taxed on their income on scale rates from 10% to a maximum rate of 30%. Resident Companies are taxed at 30%, whilst non-resident companies are taxed at 37.5%. Non-residents earning certain types of income are subject to witholding tax.
Capital Gains are taxed in Tanzania and Uganda but have been suspended in Kenya. The countries have double taxation treaties with several foreign countries.
Kenya and Uganda have transfer pricing rules which regulate transactions between resident companies and their related non-resident affiliates.
For the current tax guides click here.
What tax incentives are available to investors?
There are various tax incentives ranging from tax holidays (for Export Processing zones) to 100% or 150% investment allowances, duty waiver on certain projects, industrial building allowances, Shipping and mining allowances available for investors.
What is the investment climate in East Africa?
The governments encourage foreign and private investment and support is given through Investment Promotion authorities and Ministries. The economy is liberalized and there are no price controls , exchange controls or import/export restrictions in Kenya, Uganda, Tanzania and Rwanda. There is a well established banking, finance, insurance and private sector. Unskilled labour is relatively cheap and readily available. Expatriate staff require work permits which are facilitated by the Investment Promotion authorities for major investments.
How can PKF assist in establishing a business in Eastern Africa?
We are able to provide you with the following services:
- Registration of Business Name
- Incorporating of the limited company.
- Advising on other requirements (e.g.Trade Licence, Work Permits and Trade Marks).
- Setting up accounting systems, including computerized accounting systems or business process outsourcing.
- Advising and assisting on PAYE, Income Tax, VAT and other taxation matters.
- Preparing project feasibility study and financial projections.
- Sourcing finance
- Other related services upon request.
What sectors are attractive?
We invite you to visit the following website for the Export Processing Zone Authority, Kenya, to review various sector reports. Click Here.